Burnaby, British Columbia--(Newsfile Corp. - March 26, 2024) - Tantalus Systems (TSX: GRID) ("Tantalus" or the "Company"), a technology company dedicated to helping utilities modernize their distribution grids by harnessing the power of data, is pleased to announce its financial and operating results for the quarter ("Q4") and fiscal year ("FY") ended December 31, 2023.
Financial Highlights for FY 2023 and Q4 20231:
- Revenue: The Company generated the highest annual revenue in its history of US$42.1 million (CND$56.8 million), inclusive of US$10.4 million (CND$14.0 million) in Q4, representing a 6% increase over 2022. Revenue contributions from the Utility Software Applications and Services segment ("Software & Services") in 2023 and Q4 hit 35%, representing the highest percentage contribution in the Company's history.
- Annual Recurring Revenue (ARR)2: The Company hit another record by growing ARR to approximately US$11.5 million (CND$15.2 million) as of December 31, 2023, representing 17% growth year-over-year. Recurring Revenue recognized in the Q4 represented approximately 24% of total revenue generated.
- Gross Profit2 Margin: The Company delivered 52% for 2023 and 51% for Q4 compared to 48% and 45%, respectively, over the prior year periods. The Gross Profit Margin percentage in 2023 is the highest percentage in the Company's history and reflects the achievement of an important milestone to drive operating leverage as the business continues to scale.
- Adjusted EBITDA2: The Company delivered positive Adjusted EBITDA of US$0.35 million (approximately CND$0.5 million) in Q4 compared to positive Adjusted EBITDA of US$0.1 million (approximately CND$0.1 million) for the prior year period. Adjusted EBITDA for FY 2023, approached a point of neutrality at negative US$29k (approximately negative CND$40k) compared to negative US$2.4 million (negative CND$3.1 million) for the prior year. The Adjusted EBITDA result for 2023 includes approximately US$5.0 million (approximately CND$6.8 million) of further investment in the TRUSense Gateway product offering made throughout the year.
- Total Assets: The Company ended Q4 with US$34.8 million (CND$46.0 million) as compared to US$37.4 million (CND$50.7 million) as of December 31, 2022.
- Sales Orders: The Company converted US$35.1 million (CND$47.8 million) in orders through 2023 and added 17 new utilities to its user community, which stands at 288 as of December 31, 2023.
"Delivering record results for revenue, percentage contributions from Software & Services, Gross Profit Margin percentage and Annual Recurring Revenue are a testament to the hard work and collaboration of our entire team," said Peter Londa, President & CEO of Tantalus. "We are pleased to maintain a favorable trajectory for our shareholders by delivering another year of growth and reverting back to neutral Adjusted EBITDA for the year. We continue to invest heavily in the development and commercialization of the TRUSense Gateway and our TRUSync Grid Data Management software. As we gather feedback from the industry, we believe these investments in R&D represent a substantial near- and long-term opportunity for the Company and will ensure Tantalus is well-positioned to help utilities accelerate their grid modernization efforts."
The Company will hold a conference call and webcast to discuss the financial results on Wednesday, March 27, 2024, at 11:00 am Eastern Time.
Conference Call
Participant Dial In (Toll Free): 1-844-854-4410
Participant International Dial In: 1-412-317-5791
Participants, please ask to be joined to the Tantalus Systems call.
Webcast
Webcast URL: https://event.choruscall.com/mediaframe/webcast.html?webcastid=Vwxrc8SG
Replay Information
A conference call and webcast replay will be available until April 3, 2024. To access the conference call replay, please see details below:
US Toll Free: 1-877-344-7529
International Toll: 1-412-317-0088
Canada Toll Free: 1-855-669-9658
Replay Access Code: 1490543
Financial Statements and Management Discussion & Analysis
Please see the Company's consolidated financial statements ("Financial Statements") and related Management's Discussion & Analysis ("MD&A") for more details. The Financial Statements for the three and twelve months ended December 31, 2023, and related MD&A have been reviewed and approved by Tantalus' Audit Committee and Board of Directors. For a more detailed explanation and analysis, please refer to the MD&A that has been filed on SEDAR+ at www.sedarplus.ca and is also available on the Company's website at www.tantalus.com.
Non-IFRS and Other Financial Measures
This press release refers to the following non-IFRS measures:
"EBITDA" is comprised as income (loss) less interest, income tax and depreciation and amortization. Management believes that EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. "Adjusted EBITDA" is comprised as income (loss) less interest, income tax, depreciation, amortization, stock-based compensation, foreign exchange gain (loss) and other income / expenses not attributable to the operations of the Company. Management believes that Adjusted EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. See "Reconciliation of Net (Loss) / Income to Adjusted EBITDA" for a quantitative reconciliation of Adjusted EBITDA to the most directly comparable financial measure.
"Gross Profit" is comprised as the Company's revenues less cost of sales. Management believes that Gross Profit is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. See "Gross Profit Reconciliation" for a quantitative reconciliation of Gross Profit to the most directly comparable financial measure. This press release refers to "Gross Profit Margin" which is a non-IFRS ratio. Gross Profit Margin is comprised of Gross Profit expressed as a percentage of the Company's revenues. Management believes that Gross Profit Margin is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company.
"Adjusted Working Capital" is comprised as current assets less current liabilities exclusive of the Company's bank loan and contingent consideration relating to the acquisition of DLC Systems, Inc. d/b/a Congruitive ("Congruitive"). Management believes Adjusted Working Capital is a useful indicator for investors, and is used by management, for evaluating the operating liquidity to the Company. See "Adjusted Working Capital Reconciliation" for a quantitative reconciliation of Adjusted Working Capital to the most directly comparable financial measure.
"Recurring Revenue" is comprised of the Company's revenues that are recurring in nature and attributable to its analytics and other software as a service ("SaaS") offering, hosting services and software maintenance and technical support agreement services. "Annual Recurring Revenue" or "ARR" is comprised of the Company's Recurring Revenue as expressed on an annualized revenue basis attributable to its customer agreements at a point in time.
Such non-IFRS measures and non-IFRS ratio do not have a standardized meaning under IFRS and may not be comparable to a similar measure disclosed by other issuers.
Gross Profit Margin Reconciliation
| Three months | Three months | Twelve months | Twelve months | |||||||||||||||||||||
| ended | ended | ended | ended | |||||||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||
| 2023 | % | 2022 | % | 2023 | % | 2022 | % | |||||||||||||||||
| Revenue | $ | 10,370,092 | 100% | $ | 12,164,972 | 100% | $ | 42,146,982 | 100% | $ | 39,603,023 | 100% | ||||||||||||
| Cost of sales | 5,042,655 | 49% | 6,640,844 | 55% | 20,288,566 | 48% | 20,706,736 | 52% | ||||||||||||||||
| Gross Profit | $ | 5,327,437 | 51% | $ | 5,524,128 | 45% | $ | 21,858,416 | 52% | $ | 18,896,287 | 48% |
Reconciliation of Net (Loss)/Income to Adjusted EBITDA
| Three months | Three months | Twelve months | Twelve months | |||||||||
| ended December | ended December | ended December | ended December | |||||||||
| 31, 2023 | 31, 2022 | 31, 2023 | 31, 2022 | |||||||||
| Income (loss) for the period | $ | 1,690,831 | $ | 159,210 | $ | (1,685,197 | ) | $ | (5,195,416 | ) | ||
| Finance expense (a) | 369,046 | 297,713 | 1,509,458 | 1,070,085 | ||||||||
| Income taxes | (13,039 | ) | (912,580 | ) | 10,686 | (881,597 | ) | |||||
| Depreciation and amortization | 454,458 | 318,945 | 1,834,570 | 1,898,701 | ||||||||
| EBITDA | 2,501,296 | (136,712 | ) | 1,669,517 | (3,108,227 | ) | ||||||
| Stock-based compensation (b) | 92,972 | 169,668 | 423,221 | 773,478 | ||||||||
| Foreign exchange (c) | 122,176 | 70,690 | 211,153 | (682,774 | ) | |||||||
| Congruitive acquisition related costs (d) | - | - | - | 586,960 | ||||||||
| EDC Loan related legal costs (e) | (80,000 | ) | - | - | - | |||||||
| Government subsidy (f) | 44,681 | - | - | - | ||||||||
| Recovery of contingent liability (g) | (2,332,702 | ) | - | (2,332,702 | ) | - | ||||||
| Adjusted EBITDA | $ | 348,423 | $ | 103,646 | $ | (28,811 | ) | $ | (2,430,563 | ) |
(a)Finance expense comprised of interest and related finance expense on bank loans and lease liabilities.
(b)Share-based non-cash compensation expense.
(c)Foreign exchange comprised of unrealized (gain) / loss from non-functional currency assets and liabilities.
(d)General and administrative expenses pertaining to the Company's acquisition of Congruitive.
(e)Legal fees pertaining to the EDC Loan.
(f)United States Employee Retention Tax Credit (ERTC).
(g)Recovery of contingent liability relating to Congruitive acquisition.
Adjusted Working Capital Reconciliation
| December 31, | December 31, | |||||
| Adjusted Working Capital | 2023 | 2022 | ||||
| Total current assets | $ | 21,798,349 | $ | 22,794,298 | ||
| Less: current liabilities | (27,268,936 | ) | (29,496,580 | ) | ||
| (5,470,587 | ) | (6,702,282 | ) | |||
| Add: Bank loans - current portion | 8,500,000 | 9,200,000 | ||||
| Add: Contingent consideration | - | 2,458,702 | ||||
| Adjusted Working Capital | $ | 3,029,413 | $ | 4,956,420 |
About Tantalus Systems Holding Inc. (TSX: GRID)
Tantalus is a technology company dedicated to helping utilities modernize their distribution grids by harnessing the power of data across all their devices and systems deployed throughout the entire distribution grid. We offer a grid modernization platform across multiple levels: intelligent connected devices, communications networks, data management, enterprise applications and analytics. Our solutions provide utilities with the flexibility they need to get the most value from existing infrastructure investments while leveraging advanced capabilities to plan for future requirements. Learn more at http://www.tantalus.com/.
Forward-Looking Statements:
This news release contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information is generally identifiable by use of the words "believes", "may", "plans", "will", "anticipates", "intends", "could", "estimates", "expects", "forecasts", "projects" and similar expressions, and the negative of such expressions. Forward-looking information in this news release includes statements such as those relating to: increasing demand for the Company's solutions in support of utilities' grid modernization efforts, the commercialization and adoption of the TRUSense Gateway and TRUSync Grid Data Management (formerly known as Congruitive) software capabilities, feedback from the Company's industry, and the benefits of investment in related research and development ("R&D") initiatives to support and accelerate growth for the Company in the near- and long-term, and the ability to execute the Company's plan.
To the extent any forward-looking information in this news release constitutes a "financial outlook" within the meaning of securities laws, such information is being provided because management's estimate of the future financial performance of Tantalus is useful to investors, and readers are cautioned that this information may not be appropriate for any other purpose and that they should not place undue reliance on such information.
In connection with the forward-looking information contained in this news release, Tantalus has made numerous assumptions, regarding, among other things: the expected impact of supply chain constraints, the expected impact of inflationary pressures on costs and the expected timing of new product introductions, and the ongoing R&D investments and commercialization of the TRUSense Gateway. While Tantalus considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies. Additionally, there are known and unknown risk factors which could cause Tantalus' actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. A complete discussion of the risks and uncertainties facing Tantalus is disclosed under the heading "Risk Factors" in Tantalus' Annual Information Form dated March 31, 2023 and the Company's Annual Information Form to be filed on or prior to March 31, 2024, as well as those risk factors included with Tantalus' continuous disclosure filings with Canadian securities regulatory authorities available at www.sedarplus.ca. All forward-looking information herein is qualified in its entirety by this cautionary statement, and Tantalus disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.
Contact Tantalus:
Deborah Honig
Investor Relations
647-203-8793 | deborah@adcap.ca
Website: www.tantalus.com
LinkedIn: LinkedIn/company/tantalus
X (formerly Twitter): @TantalusCorp
1 Financial information is reported in United States dollars ("$") unless otherwise stated and in accordance with International Financial Reporting Standards ("IFRS"). Where balances are also expressed in Canadian dollars ("CND$") in this MD&A, an average foreign exchange rate of 0.7342 and 0.7410 for the three and twelve months ended December 31, 2023 (0.7366 and 0.7685 for three and twelve months ended December 31, 2022) for income statement items and a foreign exchange rate of 0.7561 as at December 31, 2023 (0.7383 as at December 31, 2022) for balance sheet items has been applied. Certain dollar amounts in this MD&A have been rounded to the nearest millions or thousands of dollars.
2 See "Non-IFRS and Other Financial Measures."
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/203165
SOURCE: Tantalus Systems Holding Inc.
